Directive 2013/11/EU of the European Parliament and of the Council of May 21, 2013, on alternative dispute resolution for consumer disputes (“Directive on Consumer ADR”) obliged Member States to bring into force the laws, regulations, and administrative provisions necessary to comply with it by July 9, 2015.
The Directive on Consumer ADR provides for the introduction of alternative dispute resolution bodies for private-law contracts between consumers and entrepreneurs and requires that proceedings conducted before such bodies satisfy certain standards.
Austria implemented the Directive on Consumer ADR by way of the Alternative Dispute Resolution Act of August 13, 2015, which entered into force in full on January 9, 2016. The Alternative Dispute Resolution Act applies to disputes between entrepreneurs and consumers that arise from non-gratuitous sales or service contracts as defined in Art. 2 of the Directive on Consumer ADR.
The Dispute Resolution Bodies
The Act appoints the following already-existing dispute settlement services as “official” dispute resolution bodies: The Arbitration Body of the Austrian Banking Sector; The Austrian Internet Ombudsman; The Arbitration Body of the Austrian Regulatory Authority for Energy; The Austrian Ombudsman’s Office for Prefabricated Houses; The Austrian Agency for Passenger Rights; and The Arbitration Body of the Austrian Regulatory Authority for Broadcasting and Telecommunications.
All consumer disputes for which no specific dispute resolution body has been provided can be addressed to the newly established Arbitration Body for Consumer Transactions.
In the first six months since entry into force of the Alternative Dispute Resolution Act, approximately 3,500 disputes have been brought before all the official dispute resolution bodies, with some 3,000 already completed. The participation rate was 91% overall and 70% in cases in which participation was voluntary. The settlement rate was 63% and the average duration of proceedings was 33 days (source: Schlichtung fur Verbrauchergeschafte).
Obligations for Dispute Resolution Bodies and Entrepreneurs
The Act also provides detailed procedural requirements for proceedings before dispute resolution bodies, mandatory reporting obligations of the dispute resolution bodies, and disclosure and information obligations of entrepreneurs.
Dispute resolution bodies have to submit an annual activity report. Among other things, this report needs to provide statistical data and point out any systematic or significant problems that occur frequently and lead to disputes between consumers and entrepreneurs, accompanied by recommendations as to how such problems can be avoided or resolved in the future.
Entrepreneurs may commit to an ADR procedure on a voluntary basis or may be obligated to do so under particular statutory provisions (e.g., under the Telecommunications Act). In both cases, entrepreneurs must inform consumers on their websites and in their general terms and conditions which ADR entities are competent for their issues. With only a few exceptions, this applies to all consumer transactions. In addition, when it comes to a specific dispute in which no agreement is reached, the entrepreneur is required to inform the consumer on paper, or in another durable medium (e.g., e-mail), which dispute resolution entity would be responsible for the dispute at hand and whether the company would be prepared to participate in a dispute resolution procedure. As a matter of principle, this information must be provided even if the entrepreneur refuses to participate in a dispute resolution procedure.
Failure to comply with these reporting requirements constitutes an administrative offence and is punishable by a fine of up to EUR 750. In addition, such offense can enhance claims for prohibitory injunction and for damages to competitors based on the Austrian Unfair Competition Act.
Supplement Online Dispute Resolution
In addition to the Directive on Consumer ADR, Regulation (EU) No 524/2013 of the European Parliament and of the Council of May 21, 2013, on online dispute resolution for consumer disputes (the “ODR Regulation”) supplements the regulatory framework for the area of online trade. It provides that entrepreneurs who conclude online purchase contracts or online service contracts with consumers (this includes not only traditional web shops, but also other types of electronically placed orders), are obligated to provide their e mail address and a link to the complaint platform of the European Commission on their websites and to include them in their general terms and conditions.
By Wolfgang Kapek and Stefan Turic, Partners, Taylor Wessing
This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.